20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Advanced Micro Devices (NASDAQ:AMD) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.
Advanced Micro Devices Background
Advanced Micro Devices designs a variety of digital semiconductors for markets such as PCs, gaming consoles, data centers, industrial, and automotive applications, among others. AMD's traditional strength was in central processing units, CPUs, and graphics processing units, or GPUs, used in PCs and data centers. Additionally, the firm supplies the chips found in prominent game consoles such as the Sony PlayStation and Microsoft Xbox. In 2022, the firm acquired field-programmable gate array, or FPGA, leader Xilinx to diversify its business and augment its opportunities in key end markets such as the data center and automotive.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Advanced Micro Devices Inc | 1331.91 | 4.31 | 10.76 | 0.54% | $1.13 | $2.75 | 4.22% |
| NVIDIA Corp | 72.17 | 40.62 | 30.36 | 30.42% | $10.96 | $13.4 | 205.51% |
| Taiwan Semiconductor Manufacturing Co Ltd | 18.61 | 4.85 | 7.51 | 6.46% | $392.33 | $296.64 | -10.83% |
| Broadcom Inc | 33.58 | 21.61 | 13.20 | 15.3% | $5.3 | $6.41 | 4.09% |
| Qualcomm Inc | 21.50 | 7.23 | 4.41 | 7.05% | $2.06 | $4.75 | -24.26% |
| Texas Instruments Inc | 21.35 | 9 | 8.34 | 10.44% | $2.34 | $2.81 | -13.53% |
| Analog Devices Inc | 28.76 | 2.63 | 7.74 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 398.70 | 15.04 | 25.29 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 18.73 | 6.63 | 5.28 | 9.66% | $1.1 | $1.53 | 8.74% |
| STMicroelectronics NV | 9.39 | 2.55 | 2.36 | 7.28% | $1.69 | $2.11 | 2.55% |
| GLOBALFOUNDRIES Inc | 22.60 | 2.94 | 4.18 | 2.34% | $0.64 | $0.53 | -10.7% |
| ON Semiconductor Corp | 14.81 | 4.23 | 3.95 | 8.05% | $0.87 | $1.03 | -0.54% |
| United Microelectronics Corp | 8.82 | 1.76 | 2.60 | 4.72% | $29.0 | $20.46 | -24.3% |
| ASE Technology Holding Co Ltd | 15.87 | 1.97 | 0.97 | 3.06% | $28.07 | $24.92 | -18.27% |
| First Solar Inc | 36.30 | 2.72 | 5.44 | 4.35% | $0.37 | $0.38 | 27.37% |
| Skyworks Solutions Inc | 16.71 | 2.69 | 3.44 | 4.09% | $0.4 | $0.48 | -13.37% |
| Lattice Semiconductor Corp | 42.86 | 14.36 | 12.28 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 41.21 | 6.09 | 14.39 | 3.77% | $0.06 | $0.11 | -12.13% |
| Rambus Inc | 25.17 | 7.42 | 15.77 | 10.86% | $0.12 | $0.08 | -6.19% |
| MACOM Technology Solutions Holdings Inc | 65.87 | 6.40 | 9.30 | 2.63% | $0.05 | $0.09 | -15.59% |
| Allegro Microsystems Inc | 20.16 | 4.60 | 4.76 | 6.18% | $0.09 | $0.16 | 15.92% |
| Average | 46.66 | 8.27 | 9.08 | 7.23% | $23.83 | $18.92 | 6.87% |
After thoroughly examining Advanced Micro Devices, the following trends can be inferred:
At 1331.91, the stock's Price to Earnings ratio significantly exceeds the industry average by 28.55x, suggesting a premium valuation relative to industry peers.
The current Price to Book ratio of 4.31, which is 0.52x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The stock's relatively high Price to Sales ratio of 10.76, surpassing the industry average by 1.19x, may indicate an aspect of overvaluation in terms of sales performance.
With a Return on Equity (ROE) of 0.54% that is 6.69% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.13 Billion, which is 0.05x below the industry average. This potentially indicates lower profitability or financial challenges.
The company has lower gross profit of $2.75 Billion, which indicates 0.15x below the industry average. This potentially indicates lower revenue after accounting for production costs.
The company's revenue growth of 4.22% is significantly below the industry average of 6.87%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In light of the Debt-to-Equity ratio, a comparison between Advanced Micro Devices and its top 4 peers reveals the following information:
When considering the debt-to-equity ratio, Advanced Micro Devices exhibits a stronger financial position compared to its top 4 peers.
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.05, which can be perceived as a positive aspect by investors.
Key Takeaways
The valuation analysis of Advanced Micro Devices in the Semiconductors & Semiconductor Equipment industry reveals that its PE ratio is high compared to its peers, indicating that the stock may be overvalued. The PB ratio, on the other hand, is low, suggesting that the stock may be undervalued based on its book value. The PS ratio is high, indicating that the stock may be overvalued relative to its sales. In terms of profitability, Advanced Micro Devices has a low ROE, suggesting lower returns on shareholder equity. Additionally, the company has low EBITDA, gross profit, and revenue growth compared to its peers, indicating potential challenges in generating profits and driving revenue growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
20-Year Pro Trader Reveals His "MoneyLine"
Ditch your indicators and use the "MoneyLine". A simple line tells you when to buy and sell without the guesswork. It’s a line on a chart that’s helped Nic Chahine win 83% of his options buys. Here's how he does it.
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